Speaking at the Mindmine Summit organized by Hero Group, Vice-Chairman of NITI Aayog, Rajiv Kumar termed the current economic slowdown as an “unprecedented situation that India has not faced in the last 70 years”.
He said that India has not faced this kind of liquidity situation where the whole financial sector is in turmoil. He also explained how the private sector is getting the worst of it as nobody wants to lend money to anybody else. The cash is sitting idle under the garb of holders.
India is currently facing the worst trend of growth in the last five years, which has alerted economist and policy leaders for the economic future of the country. He took the audience back to the IL&FS default case which triggered the authority to take a bunch of measures to ease financial stress in the economy.
Speaking from the stage, he then informed his audience about the various steps taken by the concerned government departments to handle the situation, which has slightly improved the situation.
Steps by government agencies-
- Public sector banks have provided liquidity to non-banking finance companies (NBFCs) increasing their sustainability measures in the slowdown time.
2. RBI (Reserve Bank of India) has also reduced repo rate for 4 consecutive times this year. The Central Bank has also ordered the banks to pass the rate cut benefits to borrowers, thus increasing their trust in the banking system.
3. Public sector banks have been permitted to purchase high-rated pooled assets of financially sound NBFCs.
4. The government has provided a one-time six months’ partial credit guarantee to Public Sector Banks for first loss of up to 10 percent. This partial guarantee can go a long way in helping the Asset Liability structure of banks.
5. The government has also allowed NBFCs to raise funds in public issues increasing their money-raising capacity.
6. Government has also decided to bring housing finance companies under the aegis of RBI. Currently, they were under the umbrella of the National Housing Bank.